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SYDNEY - ANZ Banking Group has posted a record first half profit, saying its New Zealand operations are exceeding expectations.
The profit came after earnings lifted 16 per cent, and the bank says it is well positioned for the rest of the year.
Australian's third largest bank said net profit for the half year ended March 31 was A$2.10 billion ($2.38 billion), up from A$1.81 billion in the same period last year.
The headline result was boosted by a one-off gain from the sale of its vehicle fleet leasing and management business FleetPartners of A$141 million after tax.
Excluding those proceeds, underlying cash net profit was A$1.94 billion, up 11.8 per cent, while cash earnings per share grew by 10.9 per cent to 104.2 cents.
The result was in line with market expectation of a result around A$1.9 billion and is expected to set the bank on track to record a full year profit of around A$4 billion.
"Conditions remain supportive of good growth," chief executive John McFarlane said.
"All in all, this is a good result.
"It sets us up well for the year as a whole and positions us well for the years ahead," he said.
ANZ reiterated its guidance for full year revenue growth between 7 and 10 per cent and expenses cost growth between 5 and 7 per cent.
But it warned that provisioning for bad debts was likely to rise in the second half of fiscal 2007.
"While the credit environment is benign, we expect provisions to be significantly higher in the second half, with the first half unusually low due to recoveries," Mr McFarlane said.
During the first half, group operating revenue grew by 13 per cent to A$5.61 billion.
Adjusted for significant items, integration costs and accounting standards, revenue was up by 9.1 per cent.
"Good cost management enabled us to maintain a gap between revenue and expense growth of 3.5 per cent," Mr McFarlane said.
This reduced the bank's cost income ratio by 1.5 per cent to 44.3 per cent.
"Although provisioning rose, it ended below our expectations as a result of large recoveries late in the half," he said.
ANZ said its personal banking business had posted a very strong result.
The New Zealand business recorded its best underlying result in recent years and the institutional business recorded double digit earnings growth.
Mr McFarlane said the bank's net interest margin decline was better than historical experience, falling just five basis points.
"Although provisions rose, they were significantly lower than we expected, due to large recoveries late in the half," he added.
"We continue to expect a substantial increase in provisions in the second half, with no material recoveries expected."
Net profit growth for the personal banking was 21.6 per cent on revenue growth of 14.4 per cent.
"All businesses delivered double-digit earnings growth, with the exception of mortgages, which was adversely impacted by the expectations of rising rates and strong price competition," the bank said.
Institutional delivered net profit growth of 10.6 per cent but revenue growth was more subdued at 5 per cent.
In New Zealand, where ANZ is the biggest banking institution, profit growth was 8.1 per cent.
"Conditions remain supportive of good growth," Mr McFarlane said.
"Personal should continue to do well, but may find it difficult to sustain such unusually high levels of growth.
"We expect to see continued momentum in New Zealand, and institutional has taken action to improve revenue and expense performance in the second half."
Mr McFarlane also said that the the group was seeing more growth from Asia, and that it would become more material to the group earnings.
ANZ declared an interim dividend of 62 cents, up 10.7 per cent on the same period last year.
- AAP
